First electric car club in Wales launched with £25k Big Lottery Fund grant

Now we know what Tesla’s (TSLA) big announcement was and how it involves Elon Musk putting his money where his mouth is “in v major way.” Let’s recap what Tesla has on offer and think a little about what this involves for the company, for the banks, for Elon Musk, why it has turned out as it has, and what it all may mean for shareholders.

Here is what Tesla has on offer if you strip away all the ‘showmanship and hype’:

Tesla’s Bank Financing Scheme

Feature

Description

Coverage

10% down

Term

66 Months

Rate

2.95%

Residual GuaranteeTesla + Musk

Like MB S-Class~43% @ 36 months

It’s a fairly conventional bank supplied financing deal for a luxury car, except for the Residual Guarantee. What this guarantee does for the customer is to make the financed purchase effectively convertible to a walk-away lease that the buyer may terminate at 36 months. It’s a great way for Tesla to assure buyers that their touch screen won’t fail and their battery will keep charging. Customers who would like a new Tesla and are either concerned about the company, the car or the battery, or are unable to write Tesla a six-figure check will love this deal.

What the availability of bank financing does for Tesla of course is to open up its market beyond the very well-heeled or very earnestly committed first adopters that have been buying every Model S just as fast as they roll off the bamboo inspection platform. It also, and very importantly, opens up access to conventional sources of financing money, backed by Tesla owners that flows into Tesla’s business model. Practically speaking, the bulk of Tesla’s gross income going forward is likely to flow through this, or a similar consumer financing facility. After all, no one who actually thinks the matter through can envision a sustainable car company business model in which the customers actually pay for the cars they buy

More <a href=”http://seekingalpha.com/article/1316451-tesla-s-car-financing-what-i-think-happened”>sekkingalpha.com</a>